- Meta’s stock price jumped 2% in premarket trading, but was dragged down by the market as whole after comments from Fed Chairman Jerome Powell
- It puts the company up 47.92% year to date, after a fall of 64.45% in 2022
- It’s been a rollercoaster ride for Meta investors over the past few years, but this efficiency drive could help bring the company back to their core revenue drivers
Meta shareholders continue to be bullish on the company’s new efficiency drive, with further layoffs pushing the stock price up around 2% to $188.88 at Tuesday’s open.
It gave up these gains over the rest of the day and actually finished the day slightly in the red, dragged down by hawkish comments from Fed chairman Jerome Powell over the next planned interest rate decision.
If you’re considering investing in companies like Meta but you’re not sure whether now’s a good time to jump in, consider Q.ai’s Emerging Tech Kit. It uses AI to predict and rebalance the portfolio every week, across a wide range of large cap tech stocks (like Meta), growth tech stocks, tech ETFs and crypto.
So far 2023 has been a fantastic year for Meta investors, after a horrorshow in 2022. Year to date the stock has gained almost 50%, rising from $124.74 on January 3rd to hit a closing high of $191.62.
It has since pulled back slightly from these highs, but the latest talk of further layoffs — or ‘efficiencies’ in management speak — has shareholders breathing a sigh of relief. In part because it obviously means a leaner operating model, but also because it appears that Zuckberg may finally be pausing his cash burning metaverse projects.
MORE FOR YOU
Download Q.ai today for access to AI-powered investment strategies.
Meta’s stock price performance in 2022
This positive start to 2023 follows a year that most Meta investors will want to forget. For brave souls who had stayed invested through the entire year, they will have seen their stock fall from $338.54 down to $120.34.
That’s a drop of 64.45%.
This included some all-time bad days for investors. The company recorded its worst single day performance ever on February 3rd, dropping 26% from $323 down to $237.76. This came off the back of a weak earnings call and the announcement of their first ever decline in daily active users.
October 26th gave the record a run for its money, with another poor quarterly earnings call causing a drop of 24.5%, taking the stock price down below $100 for the first time since 2016, closing at $97.94
Meta’s stock price performance so far in 2023
As we mentioned at the outset, Meta’s stock price is up almost 50% so far in 2023. The stock closed at $184.51 on Thursday, bringing the total gain for the year to 47.92%.
The stock has been boosted by what Mark Zuckerberg is calling the ‘year of efficiency’. Layoffs have obviously been a big part of this, as have plans to shelve or scale back projects that aren’t working.
At last month’s earnings call, Zuckerberg stated that they would proactively be looking at “cutting projects that aren’t performing or may no longer be crucial.”
These comments and layoff announcements in late 2022 drove the stock up 19.22% in January and a further 40.22% in February. So far the year of efficiency seems to be working, and it’s likely necessary given that costs and expenses ballooned 22% in the year to Q4 2022, with sales dropping 4% over the same period.
This latest round of layoffs are expected to happen imminently, with Meta planning to cut thousands of employees, potentially as early as this week. So far the details of which areas of the company, which owns multiple business units including Facebook, Instagram and WhatsApp, will be impacted.
Why does ‘efficiency’ boost stock prices?
Common sense would suggest that layoffs and cost cutting should be a bad thing from an investing standpoint. After all, it suggests that the company has made poorly judged management choices, be that hiring too many people or expanding into markets or service verticals that aren’t working.
But it’s important to keep in mind that stock markets are forward looking. Prices don’t react based on what’s happened in the past, but instead what is happening right now and what is likely to happen in the future.
Once information is made public, it becomes built into the current share price.
So when Meta announces quarterly profit figures, that moves the stock price because while it happened over the previous three months, the information is new. Once that information is out there, the stock price reacts and it is then ‘priced in’.
By the same token, business decisions that investors believe will improve a company’s bottom line in the future are likely to be positive for stock prices.
The story in tech for some time has been how bloated and inefficient they are. Large salaries, insane perks and expensive office spaces on the profit and loss statement make investors nervous, because they rely on sky high revenue to cover them and still turn a profit.
So when Mark Zuckerberg talks about cutting costs, that makes investors happy. Cost savings directly impact the bottom line, with the major caveat that they’re able to do that while still growing or maintaining revenue.
Meta’s stock price outlook
If the ‘year of efficiency’ continues, then we may see strong performance continue for Meta over the rest of this year. The challenge for Zuckerberg will be to implement his efficiency drive while still growing revenue.
Eyes will be keenly peeled for the Q1 2023 results, which should begin to show the level of financial impact being felt by the cost cuts.
If they’re able to achieve higher revenue while bringing down costs, this will improve the overall net profit margin for the company and investors are likely to be rewarded. However, if revenue falls further and the company isn’t able to maintain the same operational output with a lower headcount, that could spell bad news for shareholders.
These are the serious challenges facing tech investors right now. It’s a tough market for tech companies in general, and the macro economic environment with continued high inflation and the Fed trying to fight it with rising rates is really uncertain.
If you want to invest in tech (and with constant innovation happening all around us, who doesn’t) but you don’t know where to start, why not use cutting edge tech to invest in cutting edge tech?
Q.ai’s Emerging Tech Kit uses AI to predict the performance and volatility of four tech verticals — large cap tech stocks, small cap tech stocks, tech ETFs and cryptocurrencies via public trusts — and then automatically rebalances the Kit each week based on these predictions.
Not only that, but it does the same thing for the assets within the Kit. It means that one week investors could hold Meta stock in the Kit, and the next it could be out, depending on the read from our AI.
Download Q.ai today for access to AI-powered investment strategies.
Bonds See 2023 Recession, Stocks Aren’t So Sure
The yield curve is one of the most robust recession predictors and has signaled a recession may be coming since mid 2022. In contrast, U.S. stocks as measured by the S&P 500 are up materially from the lows of last October and only just below year-to-date highs, seemingly rejecting recession fears. Yet, fixed income markets see the Fed potentially cutting rates by the summer, perhaps reacting to a U.S. recession.
The Evidence From The Bond Markets
The recessionary evidence, at least from fixed income markets, is mounting. The 10 yield Treasury yield has been below the 2 year yield consistently since last July. That is is called an inverted yield curve and has signaled a recession fairly reliably when compared to other leading indicators.
Building on that, fixed income markets see almost a nine in ten chance that the Federal Reserve cuts rates by September of this year. That’s something the Fed has repeatedly said they won’t do on their current forecasts. Yet, a recession could cause it to happen.
The Stock Market
In contrast, the stock market shows some optimism. The S&P 500 is up 7% year-to-date as the market has shrugged off fears of contagion from recent banking issues. In particular, tech stocks have rallied.
In contrast, more defensive sectors such as healthcare, utilities and consumer goods have lagged in 2023. This suggests that the stock market is taking more of a ‘risk on’ position and is perhaps less worried about the economy.
MORE FOR YOU
That said the stock market is a leading indicator of the business cycle, it may be that stocks see a recession, but are now looking past it to growth ahead and are factoring in the lower discount rates that a recession might bring as interest rates decline. Also, the U.S. stock market is relatively global, so the fate of the U.S. economy is a key factor in driving profits, but not the only one.
Monitoring unemployment data will be key. Though the yield curve is a good long-term forecaster of recessions it is less precise in signaling when a recession starts. Unemployment rates can offer more accurate recession timing. Unemployment edged up in February, suggesting a recession may be near, but we’ve also seen monthly noise unemployment. Two similar monthly unemployment spikes during 2022 both proved false alarms.
However, if we see a sustained move up in unemployment from the low levels of 2022 that may be a relatively clear sign that a recession is here. Economist Claudia Sahm estimates that a sustained 0.5% increase in unemployment rate from 12-month lows is sufficient to trigger a recession. Unemployment rose 0.2% from January to February 2023, so maybe we’re on the way there. Of course, the jobs market performed better than expected in 2022 and it could do so again. Still, fixed income markets do suggest a 2023 recession is coming. Stock markets don’t necessarily share that view.
Which States Have The Highest And Lowest Life Expectancies?
There’s a wide variance of life expectancies among the 50 states in the U.S., according to a recent report prepared by Assurance, an insurance technology platform that helps consumers with decisions related to insurance and financial well-being.
Figure 1 below shows the 10 states with the highest life expectancy, starting with Hawaii, the state with the highest life expectancy.
Figure 2 below shows the 10 states with the lowest life expectancy, starting with Mississippi, the state with the lowest life expectancy.
Assurance scoured life expectancy data prepared in January 2023 by the U.S. Centers for Disease Control and Prevention (CDC). With this data, Assurance created several easy-to-understand graphics that offer information about life expectancies.
Life expectancies are a basic measure of well-being
As measured by the CDC, life expectancies are a basic measurement of well-being in a broad population and not a prediction of how long an individual might live. The CDC measures the expected lifespan for a person born in the year of measurement. This measurement is calculated based on the assumption that the individual will live and die according to the rates of death that are prevalent in the measurement year for each age. There’s no assumed improvement or backsliding in the assumed mortality rates in future years for each age in the life expectancy calculation.
MORE FOR YOU
By contrast, an estimated lifespan for an individual would consider their current age, their gender, and some basic lifestyle information. It might also attempt to project future improvements or backsliding in mortality rates based on key factors.
Significant influences on life expectancy calculations
Leading causes of death in the U.S. are heart disease, cancer, and accidents in that order. These immediate causes are significantly influenced by factors in the population such as poverty rates, educational attainment, rates of obesity and smoking, access to healthcare, prevalence of violent crime, and the support people receive from federal, state, and local governments. All these factors can vary widely among different states, which can be a key reason why life expectancies vary by state.
When you think about it, all these factors also have the potential to influence a person’s quality of life. The measured life expectancy rate rolls up all these factors into one objective measurement of well-being that’s based on population data.
In addition to the factors listed above, mortality rates increased and life expectancies decreased in the past few years due to the Covid-19 pandemic. A recent article titled “Live Free And Die” summarized recent research results that show that life expectancies in most countries around the world rebounded after the Covid-19 pandemic but that they continued to decline in the United States. Many of the reasons cited in the article for the continued decline in U.S. life expectancies are the same or similar to the factors listed above.
Why should retirees care about the life expectancies reported here if these measures don’t predict your own lifespan? Life expectancy calculations indicate the general well-being of the entire population in your area. While the living conditions in your area can influence your own lifespan and quality of life, retirees should focus on their remaining life expectancy given their age. They should also consider how the factors listed above that influence life expectancies in the population might apply to them.
You can obtain customized estimates of your remaining life expectancy at the Actuaries Longevity Illustrator. Part of your planning for retirement is understanding how long you an an individual might live, instead of relying on generalized information about larger populations you see in the media.
IRS Dirty Dozen Campaign Warns Taxpayers To Avoid Offer In Compromise ‘Mills’
Owing taxes can be stressful. Unfortunately, the actions of some companies can make it worse. As part of its “Dirty Dozen” campaign, the IRS has renewed a warning about so-called Offer in Compromise “mills” that often mislead taxpayers into believing they can settle a tax debt for pennies on the dollar—while the companies collective excessive fees.
The “Dirty Dozen” is an annual list of common scams taxpayers may encounter. Many of these schemes peak during tax filing season as people prepare their returns or hire someone to help with their taxes. The schemes put taxpayers and tax professionals at risk of losing money, personal information, data, and more.
Tax Debt Resolution Schemes
“Too often, we see some unscrupulous promoters mislead taxpayers into thinking they can magically get rid of a tax debt,” said IRS Commissioner Danny Werfel.
“This is a legitimate IRS program, but there are specific requirements for people to qualify. People desperate for help can make a costly mistake if they clearly don’t qualify for the program. Before using an aggressive promoter, we encourage people to review readily available IRS resources to help resolve a tax debt on their own without facing hefty fees.”
MORE FOR YOU
Offers In Compromise
Legitimate is a key word. Offers in Compromise are an important program to help people who can’t pay to settle their federal tax debts. But, as the IRS notes, these “mills” can aggressively promote Offers in Compromise—OIC—in misleading ways to people who don’t meet the qualifications, frequently costing taxpayers thousands of dollars.
An OIC allows you to resolve your tax obligations for less than the total amount you owe. You generally submit an OIC because you don’t believe you owe the tax, you can’t pay the tax, or exceptional circumstances exist.
Because of the nature of the OIC—and the dollars involved—the process can be time-consuming. It can also be confusing for taxpayers who may not have a complete grasp on their finances.
First, you must complete a detailed application, Form 656, Offer in Compromise. You must also submit Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, or Form 433-B, Collection Information Statement for Businesses, with supporting documentation (generally, bank and brokerage statements and proof of expenses).
You’ll also need to submit a non-refundable fee of $205 and payment made in good faith. The payment is typically 20% of the offer amount for a lump sum cash offer or the first month’s payment for those made over time. Generally, initial payments will not be returned but will be applied to your tax debt if your offer is not accepted. Payments and fees may be waived if the OIC is submitted based solely on the premise that you do not owe the tax or if your total monthly income falls at or below income levels based on the Department of Health and Human Services (DHSS) poverty guidelines.
The IRS will examine your application and decide whether to accept it based on many things, including the total amount due and the time remaining to collect under the statute of limitations. The IRS will also review your income—including future earnings and accounts receivables—and your reasonable expenses, as determined by their formula. The IRS will also consider the amount of equity you have in assets that you own—this would include real property, personal property (like automobiles), and bank accounts.
Before your offer can be considered, you must be compliant. That means you must have filed all your tax returns and paid off any liabilities not subject to the OIC. After you submit your offer, you must continue to timely file your tax returns, and pay all required tax, including estimated tax payments. If you don’t, the IRS will return your offer.
Additionally, you cannot currently be in an open bankruptcy proceeding, and you must resolve any open audit or outstanding innocent spouse claim issues before you submit an offer.
You can probably tell—it’s a lot to consider. You may want representation. A tax professional can help marshal you through the process and offer practical guidance, while communicating what fees could look like.
By contrast, according to the IRS, an OIC “mill” will usually make outlandish claims, frequently in radio and TV ads, about how they can settle a person’s tax debt for cheap. Also telling: the fees tend to be significant in exchange for very little work.
Those mills also knowingly advise indebted taxpayers to file an OIC application even though the promoters know the person will not qualify, costing taxpayers money and time. You can check your eligibility for free using the IRS’s Offer in Compromise Pre-Qualifier tool.
“Pennies On A Dollar”
What about those promises that taxpayers can routinely settle for pennies on a dollar? Not true. Generally, the IRS will not accept an offer if they believe you can pay your tax debt in full through an installment agreement or equity in assets, including your home. That’s why the IRS tends to reject a majority of OICs that are submitted. The acceptance rate is less than 1 in 3, according to the 2021 Data Book.
The IRS will generally approve an OIC when the amount offered represents the best opportunity for the IRS to collect the debt. It’s true that there’s a formula that the IRS uses to figure out how much they think they can collect from you. But there is some wiggle room to account for special circumstances, including a loss of income or a medical condition. It’s worth noting those are the exceptions, not the rule.
While submitting an OIC may keep the IRS from calling you, it doesn’t stop all collections activities—don’t believe companies that suggest that submitting an OIC will make your tax debt disappear. Penalties and interest will continue to accrue on your outstanding tax liability. Additionally, the IRS may keep your tax refund, including interest, through the date the IRS accepts your OIC.
You may also be liened. In most cases, the IRS will file a Notice of Federal Tax Lien to protect their interests, and the lien will generally stay in place until your tax obligation is satisfied.
An OIC is a serious effort to resolve tax debt and shouldn’t be taken lightly. Be skeptical—if it sounds too good to be true, it likely is. If you’re considering an OIC, hire a competent tax professional who understands the rules and is willing to level with you about your chances of being successful—including other options. Don’t fall into a trap that can make your situation worse.
Interviews2 years ago
Interview with Jean-Francois Desormeaux, Real Estate Investor
Technology10 months ago
Amplio helps companies find components when supply chain breaks down
Business News1 year ago
NFTMagazine.com Is Bringing NFTMag Conference 2022 to Miami this Year Says JetSetFly
Technology1 year ago
General Atlantic buys out SoftBank’s 15% stake in edtech Kahoot, now valued at about $152M vs the $215M SoftBank ponied up 2 years ago
Interviews10 months ago
Interview with Justice Mitchell, A 16-year-old Student-Athlete Who Received a Basketball Scholarship Offer from Pennsylvania University Greater Allegheny
Interviews1 year ago
Paying it Forward — Meet Dr. Jonathan Kenigson, the Founder of the World’s Leading Think-Tank in the Quadrivium
Entrepreneurship2 years ago
600% In Under 5 Years, Financial Advisors Grow Business By Podcasting And YouTube
Entrepreneurship2 years ago
Muminovic Benjamin E-commerce on Shopify the Course of the Business Man